Town council approves flexible budget approach for new year

Responding to an economic situation that appears it might get worse before it gets better, the Pagosa Springs Town Council has drafted budget policy that provides flexibility for answering fluctuating financial conditions.

The policy was presented by new town manager David Mitchem at a council work session held last Friday in council chambers at Town Hall.

The resolution calls for a 5-percent reduction in the 2009 budget compared to the 2008 budget, but also stipulates monthly monitoring of town revenues in order to recognize fluctuations in those revenues. Given a significant dip in the revenues (based on reports from the previous two months), the town could respond with further budget cuts in response to decreased revenue streams.

The town would respond to a 5-percent drop in revenue with a 10-percent reduction in expenditures. Furthermore, a 10-percent drop in revenues would lead to 15-percent budget cut, and a 15-percent drop would lead to a further 20-percent reduction in expenses.

Cuts to the budget would entail as little as asking department heads to excise nonessential services (with a 10-percent drop in revenues) to implementing a full hiring freeze and focusing on only essential services (in the worst-case scenario). The policy states that “the town will not delay its response to changes in revenue streams,” suggesting that any such changes reported would necessitate immediate response by the board.

In introducing the resolution for the policy, Mitchem said, “As the national economy continues to deteriorate, unemployment at 6.7 percent and may go as high as 8 percent, the five percent reduction in the budget may only be a start.”

Mitchem went on to say that he’d talked with local business owners and that “They’re having problems, they see a downturn.”

Mitchem added that “The Wolf Creek ski area has reported a 6 percent reduction in pre-sales from last year and we’re seeing a drop in other leading indicators.”

Council briefly discussed the merits of the suggested policy approach, a dialogue noticeably lacking dissent. Council member Darrel Cotton said, “On the capital improvement side, this could be a problem. Once we start a project, the money has to be there,” but then added, “On the operational side, this works great.”

Council member Mark Weiler, co-author of the first budget proposal that proposed a 22-percent reduction in expenses based on a projected 22-percent reduction in revenues (as reported in the Oct. 23 SUN), was not present at the work session.

Barely 30 minutes after the meeting started, council member Shari Pierce made a motion to approve the policy. After a second by Jerry Jackson, the motion was passed, unanimously.

jim@pagosasun.com